‘Subsidise Local Production, Not Imported Consumption’

The unanimous opinion of protagonists and antagonists in the fuel subsidy discussion at the town hall meeting convened by the Newspaper Proprietors Association of Nigeria (NPAN) Thursday was straightforward: deregulation is a good policy, but government must win the trust of the people.

A panellist and governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi, offered a remarkable insight into the subsidy crisis, warning: “You don’t subsidise imported consumption… you subsidise local production.”

He expressed dissatisfaction that between January and November this year, the total amount of forex demand at the Wholesale Dutch Auction System (WDAS) by oil marketers was $8 billion, just as he disclosed that the total amount of fuel subsidy that was granted to oil marketers within the same period was $8 billion.

“If the Federal Government continues to subsidise fuel, the next government would face crisis that may even be worse than the euro crisis. Our reserves have fallen to the extent that if oil prices drop, we may not have a shock absorber to withstand any shock. Subsidising imported petroleum products only create jobs for the country where the products is being imported from,” Sanusi said.
“Removing the fuel subsidy is not some magic silver bullet that can solve all the problems of Nigeria … but the burden is unsustainable on the government’s finances,” he said. “We can keep paying the subsidy into 2015, but the next government will be saddled with the debt.”

The first-of-its-kind meeting on the subsidy controversy, moderated by the NPAN President and Chairman/Editor-in-Chief of THISDAY, Mr. Nduka Obaigbena, was attended by government ministers, labour leaders and activists.

Significantly, panellist and Edo State Governor Adams Oshiomhole – well known for his staunch opposition to the removal of subsidy as president of the Nigeria Labour Congress (NLC) – made a strong case for the deregulation of the downstream sector of the economy.

But labour leaders said they do not have confidence in the deregulation policy because the government had “consistently shown that it cannot be trusted”. Oshiomhole, who stated that he would always be on the side of the people, declared that leadership is not a popularity contest.